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Weekend Spending Suggests Credit Card Use Is Rapidly Declining

Posted on 22. Dec, 2009 in Saving money

Despite most people’s finances not being at their best, it is hard to resist the allure of the the holiday season.

Internet sales have increased by 18% since 2008. November the 29th, now dubbed ‘Cyber Sunday’, saw British consumers spend approximately £320million over in the internet to purchase holiday gifts (and the occasional personal treat). On the 30th, more tenuously called ‘Mega Monday’, VISA expects £2.4 million’s worth of purchases will take place. By Christmas Day itself, almost £4.6 billion is likely to be spent on the season of goodwill. Last year, Amazon’s busiest sales day saw almost 16 order per second – this year looks set to break this record. Internet trading group IMRG predicts the online sales totals to break £13 billion.

And, as Richard Dodd, of the British Retail Consortium, points out: “just over 95% of all retail sales happen in the shops.” With the internet making it far easier to compare prices around the world, the once peculiarily American tradition of ‘Black Friday’ has begun sneaking its way overseas. For example, Apple offered numerous discounts on iPods, Macbooks and many other hotly desired items.

But despite more people than ever spending, the overall amounts in play were not as impressive as previous years. A National Retail Federation poll in America found that despite an increase of 23 million people heading out over the weekend to shop, the average consumer spent $29.26 less than in 2008. Marketing Specialist Dr. William Rice notes that what makes this figure so concerning is that these low figures were in spite of the marketing industry’s most creative year in decades.

As people are less willing to get into credit card debt, similar amount of creativity has been required by credit card marketers. Despite the many of the best credit cards rewards offered by companies like MBNA, there has been a general tendency towards more cautious spending. ‘America’s Research Group’ research commissioned by Reuters showed that only 26% of the weekend’s shoppers used credit cards for their payments.

Beyond the immediate appeal of access to an obscene amount of cash, there are far more sensible reasons to be drawn back into the habit of using credit cards – as long as you can afford to pay them off. Samantha Owens, Head of Personal Finance at MoneyFacts, suggests “you could even profit from your Christmas spending” by combining cards with a high-rate of limited cashback (such as Abbey National) and cards with lower, but unlimited, amounts (as with Capital One).